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P.PIP.0735 - Utilising Environmental Upgrade Agreements to drive investment in solar farming at Australian Abattoirs Project code: P.PIP.0735 Prepared by: Peter Summers Beon Energy Solutions and Next Generation Electrical and Peter Elliott EPS Consultants on behalf of Hardwick’s Pty Ltd Date published: 20 February 2018 PUBLISHED BY Meat and Livestock Australia Limited Locked Bag 1961 NORTH SYDNEY NSW 2059 Processor Microgrids for a Carbon Neutral Red Meat Processing Facility 1. Initial feasibility and detailed cost/benefit analysis (CBA) This is an MLA Donor Company funded project. Meat & Livestock Australia acknowledges the matching funds provided by the Australian Government and contributions from the Australian Meat Processor Corporation to support the research and development detailed in this publication. This publication is published by Meat & Livestock Australia Limited ABN 39 081 678 364 (MLA). Care is taken to ensure the accuracy of the information contained in this publication. However MLA cannot accept responsibility for the accuracy or completeness of the information or opinions contained in the publication. You should make your own enquiries before making decisions concerning your interests. Reproduction in whole or in part of this publication is prohibited without prior written consent of MLA. milestone report

P.PIP.0735 Final Report - Meat & Livestock Australia · 2020. 9. 2. · P.PIP.0735 - Utilising Environmental Upgrade Agreements to drive investment in solar farming at Australian

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  • P.PIP.0735 - Utilising Environmental Upgrade Agreements to drive investment in solar farming at Australian Abattoirs

    Project code: P.PIP.0735

    Prepared by: Peter Summers

    Beon Energy Solutions and Next Generation Electrical

    and Peter Elliott

    EPS Consultants on behalf of Hardwick’s Pty Ltd

    Date published: 20 February 2018

    PUBLISHED BY Meat and Livestock Australia Limited Locked Bag 1961 NORTH SYDNEY NSW 2059

    Processor Microgrids for a Carbon Neutral

    Red Meat Processing Facility

    1. Initial feasibility and detailed cost/benefit analysis

    (CBA)

    This is an MLA Donor Company funded project.

    Meat & Livestock Australia acknowledges the matching funds provided by the Australian

    Government and contributions from the Australian Meat Processor Corporation to support

    the research and development detailed in this publication.

    This publication is published by Meat & Livestock Australia Limited ABN 39 081 678 364 (MLA). Care is taken to ensure the

    accuracy of the information contained in this publication. However MLA cannot accept responsibility for the accuracy or

    completeness of the information or opinions contained in the publication. You should make your own enquiries before making decisions concerning your interests. Reproduction in whole or in part of this publication is prohibited without prior written consent

    of MLA.

    milestone report

  • P.PIP.0735 - Utilising Environmental Upgrade Agreements to drive investment in solar farming at Australian Abattoirs

    Page 2 of 37

    Executive Summary

    This first milestone, initial feasibility and cost/benefit analysis, has confirmed that a microgrid

    ancillary/emergency solar PV system and battery storage can provide a cost effective risk

    management solution to electrical services for Hardwick’s Pty Ltd meat processing facility at

    Kyneton. In particular, the system can be constructed to provide:

    A project which has an estimated pay-back period of 5.7 years and which is also

    expected to be cash flow positive from year 1;

    Load shedding technology/battery storage/operational interface controls which

    allows the microgrid system to provide emergency power on an uninterrupted basis

    for an extended period during daylight hours (presently undeveloped in commercial

    operations) should a major external grid failure occur;

    Economic benefits from solar energy, even in a location with low temperatures and

    long periods of cloud cover;

    Site integration with Hardwick’s electrical network to allow energy management

    and energy usage control; and,

    Benefits from integrated grazing management for stock grazing and shading under

    solar arrays.

    This milestone report also provides the basis of the “Go/No Go” decision point detailed at this

    stage of the project within the Project Agreement Milestones schedule.

    R&D Proposal for the Development of the Project

    In terms of the “Go/No Go” decision point, it is proposed that the Research and Development

    (R&D) activities to be undertaken during the detailed design, construction and initial operations

    of this project will be of significant benefit to the Australian red meat industry. In particular, the

    novel R&D activities to be explored further are noted in the table below:

    Novel R&D activity (i.e. what

    is novel for the Australian red

    meat industry)

    Existing examples, if they

    exist in other parts of the

    world and in other industries

    Industry value proposition

    (i.e. number of locations

    where the innovation could

    be applied if proven

    successful in the proposed

    project)

    Demonstrate the technical and

    economic feasibility of

    microgrid “Load Shedding”

    technology which can enable a

    site to operate independently of

    the power grid. Load shedding

    technology also allocates costs

    to areas or equipment.

    Hardwick’s will be able to

    collect, calculate and report

    costs for specific lighting circuits

    Our research has found only

    two examples of similar

    microgrid load shedding

    developments. They are both

    used for remote area support

    where unreliable grid supplies

    exist. One is located for a

    village in Zambia, and one for a

    town in WA.

    The project could provide an

    innovative solution to all meat

    industry operations particularly

    where sufficient land is

    available for the technology.

    The present situation with the

    Australian power grid and

    change to renewables with the

    exclusion of base load coal and

    gas power stations, greatly

    increases the risk of major grid

  • P.PIP.0735 - Utilising Environmental Upgrade Agreements to drive investment in solar farming at Australian Abattoirs

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    or types, buildings, or microgrid

    production

    failures and extended power

    outages. In Hardwick’s case,

    the potential loss from a major

    power failure could total $6M+.

    Development of battery

    storage.

    Traditional grid tied inverters

    are designed to disconnect from

    the grid if an outage occurs but

    also isolate the solar system to

    ensure energy generation isn’t

    passed up the line and onto the

    distribution network. Project

    research will be conducted to

    access whether the use of

    Tesla Lithium battery storage

    technology can play a role in

    maintaining Hardwick’s

    operation if there was a grid

    outage throughout the day.

    NGE will test whether keeping

    the inverters alive with batteries

    during day light hours to ensure

    the solar panel harvest

    continues and then

    systematically distributing then

    energy production to

    Hardwick’s plant through

    energy control equipment. This

    could provide a cleaner and

    cheaper way of providing back

    up power versus diesel power

    generation.

    This system will also enable the

    monitoring of power quality,

    voltage, current and power

    factor, whilst enabling

    Hardwick’s management to split

    out and highlight how much

    energy certain areas of the

    abattoir are using. Data

    analysis will also highlight any

    irregularities in energy usage

    where rectification may be

    required quickly

    None known. Similar comments to the above.

    In addition, the effective

    development of the load

    shedding aspects could assist

    other meat industry operations

    in working towards “off grid”

    solutions. This is becoming an

    increasing focus due to the

    rapid increase in power costs,

    and the projection of further

    substantial increases. It is also

    a crucial step in heading to a

    carbon neutral focus.

    This project represents a

    unique opportunity to trial an

    While test cases for various

    innovation projects exist, such

    Similar comments to both of the

    above sections.

  • P.PIP.0735 - Utilising Environmental Upgrade Agreements to drive investment in solar farming at Australian Abattoirs

    Page 4 of 37

    innovative approach to outage

    mitigation. Hardwicks has

    experienced a minimum of one

    outage per year, with up to 3

    hours of down time. As the site

    is not equipped with backup

    generation, the outage has a

    direct impact on the operations

    of the business. At this stage,

    due to the robustness of the

    external power grid, business

    losses from these outages have

    been minimised. However,

    taking the SA experience into

    account, along with the recent

    removal of Hazelwood from

    service in Victoria, there is a risk

    of an outage over a number of

    days with the potential of large

    losses of product held in cool

    storage. It is becoming

    increasingly concerning that

    power reliability is not being

    guaranteed by levels of

    Government and Hardwick’s

    consider that they need to take

    control of own power generation

    destiny and risk management.

    as airports and even industrial

    precincts with food processing

    industries1, they have never

    been implemented in a full scale

    project. Up until now, the

    urgency of establishing a

    microgrid system has not been

    imperative due to the reliability

    of the power grid. This situation

    has rapidly changed following

    the removal of traditional power

    stations from the grid and

    system failures.

    Additional R&D will be

    undertaken to also design the

    battery system for supplying

    energy for extended periods of

    time, bringing the reliability of

    the system from sun-times only

    to anytime. In this process, we

    will be able to build on the

    experience developed by

    CitiPower and Powercor from

    the 2MW/2MWh Li-ion battery

    where the islanding capability

    has been extensively tested.

    Some initial work has been

    completed as noted by

    CitiPower and Powercor. This

    will extend this knowledge to a

    practical application.

    Similar comments to above.

    Development of an integrated

    land use management plan

    associated with the solar array.

    The differences in installation

    and unique business

    Although some solar

    installations have trialled

    vegetation control using sheep,

    none are known to have

    undertaken more detailed

    The approach could be

    replicated in any other location

    with sufficient available land.

    1 See the study released by ENEA in February 2017: https://www.enea-consulting.com/en/urban-microgrids-opportunities/

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    opportunities provide an

    opportunity to study additional

    dual land use research topics

    including:

    Advancing research into crop/grass growth under various dual purpose and partial shade situations;

    Measurement and quantification of operational cost reduction as a result of dual purpose land use combining sheep grazing and PV installation;

    Opportunities for advertising and branding studies for “Hardwick’s Solar Sheep” or similarly branded products.

    crop/grass assessment or

    marketing advantages. This

    project provides a cutting edge

    example of the research

    possibilities of dual land use

    available through ground

    mounted PV renewable energy

    systems.

    The load shedding interface involves previously untried control systems and procedures

    associated with the external power grid system. The planned design incorporates the use of

    a battery system to ensure uninterrupted operation of the solar system during major external

    power grid failures/shutdowns. We are unaware of any similar installations in Australia or

    elsewhere involving uninterrupted operation. In traditional solar systems, the solar system

    shuts down during external outages. The solar and power electronics systems can be further

    developed to allow for back-up generation in case of outage events, effectively allowing the

    precinct to keep running in the absence of grid power. Such a system with islanding

    capabilities is considered as an industrial microgrid, taking community microgrid technologies

    to industrial uses. While test cases for various innovation projects exist, such as airports and

    even industrial precincts with food processing industries2, they have never been implemented

    in a full scale project. Up until now, the urgency of establishing a microgrid system in Australia

    has not been imperative due to the reliability of the power grid. This situation has rapidly

    changed following the removal of traditional power stations from the grid, and system failures.

    The development of this interface is becoming more critical as coal/gas baseload power

    stations are becoming a reduced part of the Australian generating system which has increased

    the power system operating risks (eg: recent power outages in SA, severe shortages and

    shedding in Tasmania, the closure of Hazlewood Power Station in Victoria). Hardwick’s are

    concerned with the risk of adverse business impacts due to these increasing issues in their

    own situation, and in proceeding with this project they will also be accepting the risk of funding

    development of a microgrid system for the rest of the industry. The proposed control and

    interface system will have significant potential benefits for other businesses within the red

    2 See the study released by ENEA in February 2017: https://www.enea-consulting.com/en/urban-microgrids-opportunities/

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    meat supply chain, especially those with the high commercial risks associated with major

    power system outages. Hardwicks has experienced a minimum of one outage per year, with

    up to 3 hours of down time. As the site is not equipped with backup generation, the outage

    has a direct impact on the operations of the business. At this stage, due to the robustness of

    the external power grid, losses from these outages have been minimised. However, taking the

    SA experience into account, along with the planned removal of Hazelwood from service in

    Victoria, there is a risk of an outage over a number of days with the potential of large losses

    of product held in cool storage. An opportunity exists to investigate the feasibility of protecting

    an abattoir against outages where learnings can be applied industry wide.

    The power requirements of Hardwick’s are also growing due to increasing production and

    processing of red meat and offal products. Hardwick’s is faced with the challenge of major

    infrastructure costs to upgrade grid connection and alternative technologies such as a

    microgrid based on solar PV represent a cost efficient solution as well as risk mitigation against

    an increasingly unreliable external power grid as noted above. As the business grows, the

    economic risk of an extended power outage has major impacts on perishable product and

    production. The microgrid system mitigates this risk.

    An economic model and cost/benefit analysis has been developed as part of the project.

    Extensive analysis of the Hardwick’s power usage trends, demands and future loads was

    conducted. Several technologies were analysed including battery storage, combustion

    generation, thermal storage, HV customer, power correction and solar PV based microgrid.

    This package has been used to highlight a detailed value proposition based on customer input

    data and average system operational data for systems of a similar size from the Beon Energy

    Solutions customer database, taking into consideration all known costs, losses, gains and

    savings. This model and approach can be repeated for other customers within the industry,

    saving time and money during the research phase.

    The planned project involves the provision of a 1.5MW microgrid power generation system

    and will therefore demonstrate the first use of a microgrid system in an Australian abattoir.

    Present annual electricity usage by Hardwicks is 7,225 MW Hrs per annum. The planned

    system will also provide 2,359 MW Hrs per annum, or approximately 30% of total electricity

    usage. By exploring this technology, which is not currently being adopted by the red meat

    processing sector, the project will pioneer the adoption of a large-scale microgrid that has the

    potential to significantly improve sustainability of the red meat processing sector in Australia.

    By proving the overall performance of a solar based microgrid project for meat processing

    facilities in a cool climate with extensive periods of cloud cover, a successful project in Kyneton

    will also provide a case study basis which can provide confidence in other areas where hotter

    weather and increased solar energy are available.

    Another R&D activity will involve developing the requirements for site integration with the

    Hardwicks power supply network. This will require sophisticated internal control and

    management systems to maximise cost advantages and provide control and management

    decision inputs on power usage during emergency system outages where solar will be the

    sole source of plant electrical supplies (e.g. management of cooling systems etc).

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    Another novel area of R&D will include the demonstration of intensive multi-purpose land

    utilisation. The land to be made available for the microgrid solar array will also be used for

    stock grazing, which will require the development of an integrated land use management plan

    taking into account access and maintenance requirements of the solar array, as well as the

    vegetation and shading requirements of the animals that will graze underneath the arrays. The

    land loss from solar arrays is presently seen as a negative issue to the implementation of solar

    systems at meat processing plants and this R&D will provide a basis for overcoming this issue

    into the future.

    Hardwicks note that throughout the completion of Milestone 1, Next Generation Electrical and

    Beon Energy Solutions have demonstrated high levels of advanced knowledge and expertise

    in microgrid technology and have demonstrated the potential benefits of new load-

    shedding/battery/control systems with power grid interfaces. Hardwick’s have a high level of

    confidence that the proposed R&D will provide a beneficial solution with ready application for

    the Australian red meat industry.

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    Table of Contents

    1 Milestone description ........................................................................................................ 10

    1.1 Milestone 1 ................................................................................................................ 10

    1.1.1 Initial feasibility and detailed cost/benefit analysis (CBA) ................................. 10

    2 Project objectives ............................................................................................................. 10

    2.1 Feasibility of load shedding and battery storage technology ................................... 10

    2.1.1 Energy control .................................................................................................... 10

    2.1.2 Battery Storage .................................................................................................. 11

    3 Innovation ......................................................................................................................... 13

    3.1 Detailed explanation of the mechanics of the environmental upgrade agreement for

    the project ............................................................................................................................. 14

    3.1.1 Overview ............................................................................................................ 14

    3.1.2 How It Works ...................................................................................................... 14

    3.1.3 Benefits .............................................................................................................. 15

    3.1.4 Eligibility ............................................................................................................. 15

    3.1.5 Fees and Other Implications .............................................................................. 15

    3.1.6 Cash flows .......................................................................................................... 17

    3.1.7 High Level Steps ................................................................................................ 18

    3.2 Projected electricity generation from the microgrid .................................................. 18

    3.2.1 Overview ............................................................................................................ 18

    To understand the drivers of Hardwick’s current load profile, analysis focused on the

    2,000 kVa connection, comprising of: .............................................................................. 19

    1 x freeze compressor, 70 – 90 kW with a steady load ............................................ 19

    3 x chilling compressors, 150 – 465 kW with intermittent loads ............................... 19

    3.2.2 Normalised Production and Performance Ratio ................................................ 22

    3.3 Benefits of integrated grazing management plan for stock grazing and shading

    under microgrid solar arrays ................................................................................................ 23

    3.4 Integration with site electrical network ...................................................................... 25

    3.4.1 Build Plan ........................................................................................................... 25

    3.4.2 System Electrical Schematic ............................................................................. 27

    3.4.3 Trench and Cable Plan ...................................................................................... 28

    3.5 Planning considerations ............................................................................................ 29

    3.5.1 Topology & Soil Testing Results ............................................................................. 29

    3.5.1 Local Council Feasibility .................................................................................... 32

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    3.5.2 Network Study .................................................................................................... 32

    3.5.3 Infrastructure ...................................................................................................... 32

    3.5.4 Design Considerations ....................................................................................... 32

    3.5.5 Finance & Taxation Considerations .................................................................. 32

    4 Summary of costs and benefits (economic, social, and environmental) ......................... 33

    4.1 Economic ................................................................................................................... 33

    4.2 Social ......................................................................................................................... 34

    4.3 Environmental ........................................................................................................... 34

    5 Success in meeting the milestone .................................................................................... 35

    5.1 Milestone 1: Successful ............................................................................................ 35

    6 Overall progress of the project (optional) ......................................................................... 35

    6.1 Milestone 1 of 6 ......................................................................................................... 35

    7 Conclusions/recommendations ........................................................................................ 35

    7.1 Conclusion ................................................................................................................. 35

    8 Appendix ........................................................................................................................... 37

    8.1 Appendix 1 – Detailed Designs ................................................................................. 37

    8.2 Appendix 2 – Topology Report ................................................................................. 37

    8.3 Appendix 3 – EUA Cash flows .................................................................................. 37

    8.4 Appendix 4 – GANTT Chart ...................................................................................... 37

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    1 Milestone description

    1.1 Milestone 1

    1.1.1 Initial feasibility and detailed cost/benefit analysis (CBA)

    Milestone report detailing:

    2.1) Projected electricity generation from the solar array

    2.2) Benefits of integrated grazing management plan for stock grazing and shading

    under solar arrays

    2.3) Integration with site electrical network

    2.4) Feasibility of load-shedding technology

    2.5) Planning considerations

    2.6) Detailed explanation of the mechanics of the environmental upgrade

    agreement for the project

    2.7) Summary of costs and benefits (economic, social, and environmental)

    Appendix 1 – Designs

    Appendix 2 – Topology Report

    Appendix 3 – EUA Cash flows

    Appendix 4 – GANTT Chart

    2 Project objectives

    2.1 Feasibility of load shedding and battery storage technology

    2.1.1 Energy control

    Load shedding technology provides insight and understanding into energy usage, allowing

    Hardwick’s to take control and turn complex power analysis into simple, actionable

    information. Energy monitoring focuses on real-time and historical trends while analysing

    energy quality and availability to measure efficiency, reveal opportunities and verify savings.

    This is achieved through displaying energy usage in an easy to understand format, such as

    viewing energy cost in dollars instead of KWh, auditing efficiencies and justifying lighting /

    solar by tracking ROI and forecasting payback. The hardware and software unpinning the load

    shedding technology is highlighted below:

  • P.PIP.0735 - Utilising Environmental Upgrade Agreements to drive investment in solar farming at Australian Abattoirs

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    Load shedding technology also allocates costs to areas or equipment. Hardwick’s will be able

    to collect, calculate and report costs for specific lighting circuits or types, buildings, or microgrid

    production. Various energy drivers, such as temperature can also be overlayed and analysed:

    2.1.2 Battery Storage

    Traditional grid tied inverters are designed to disconnect from the grid if an outage occurs but

    also isolate the solar system to ensure energy generation isn’t passed up the line and onto

    the distribution network. Project research will be conducted to access whether the use of Tesla

    Lithium battery storage technology can play a role in maintaining Hardwick’s operation if there

    was a grid outage throughout the day.

    NGE will test whether keeping the inverters alive with batteries during day light hours to ensure

    the solar panel harvest continues and then systematically distributing then energy production

    to Hardwick’s plant through energy control equipment. This could provide a cleaner and

  • P.PIP.0735 - Utilising Environmental Upgrade Agreements to drive investment in solar farming at Australian Abattoirs

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    cheaper way of providing back up power versus diesel power generation to not only

    Hardwick’s but all industries.

    This system enables the monitoring of power quality, voltage, current and power factor, whilst

    enabling Hardwick’s management to split out and highlight how much energy certain areas of

    the abattoir are using. Data analysis will also highlight any irregularities in energy usage where

    rectification may be required quickly.

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    3 Innovation

    The electronics systems can be further designed to allow for back-up generation in case of

    outage events, effectively allowing the precinct to keep running in the absence of grid power.

    Such a system with islanding capabilities is considered as an industrial microgrid, taking

    community microgrid technologies to industrial uses. While test cases for various innovation

    projects exist, such as airports and even industrial precincts with food processing industries3,

    they have never been implemented in a full scale project. Up until now, the urgency of

    establishing a microgrid system has not been imperative due to the reliability of the power grid.

    This situation has rapidly changed following the removal of traditional power stations from the

    grid and system failures.

    This project represents a unique opportunity to trial such an innovative approach to outage

    mitigation. Hardwicks has experienced a minimum of one outage per year, with up to 3 hours

    of down time. As the site is not equipped with backup generation, the outage has a direct

    impact on the operations of the business. At this stage, due to the robustness of the external

    power grid, business losses from these outages have been minimised. However, taking the

    SA experience into account, along with the planned removal of Hazelwood from service in

    Victoria, there is a risk of an outage over a number of days with the potential of large losses

    of product held in cool storage. An opportunity exists to investigate the feasibility of protecting

    an abattoir against outages through the following process:

    1. What is to be gained? Mitigation of business risks which would be incurred by the

    business as a direct result of outages. This includes costs involved with lost hours of

    operations, process restart costs, additional cleaning and loss of products.

    2. How, and at what costs?

    Market research of successful community projects to be built upon

    Load study to prioritise processes and appliances and setup a merit order of

    what should have priority in terms of remaining powered. Optimum design (and

    costs) will combine typical outage durations with process resilience’s

    Specifications for the site and related costs

    3. What is the value for the industry?

    Resulting value for Hardwicks

    Typical value for a brownfield, retrofit project

    Typical value for a greenfield project

    If sensible, the results of the feasibility will be transferred to similar industries and activities, in

    order to assess the potential deployment across other businesses.

    In practicality, the microgrid system will not only sustainably power the site for its business “as

    usual” operations but will reduce business risks by providing an increased reliance against

    grid instability. Cost optimisation will be completed by keeping critical processes running; as

    defined by the industry experts. As for any insurance mechanism, microgrid setups must be

    designed to various levels of event criticality.

    3 See the study released by ENEA in February 2017: https://www.enea-consulting.com/en/urban-microgrids-opportunities/

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    A particular care will be given to the handling of inverters, which may require a specific

    battery system for power support to allow the solar array to provide load to the precinct. An

    extension of this work will be to also design the battery system for supplying energy for

    extended periods of time, bringing the reliability of the system from sun-times only to

    anytime. In this process, we will be able to build on the experience developed by CitiPower

    and Powercor from the 2MW/2MWh Li-ion battery where the islanding capability has been

    extensively tested.

    3.1 Detailed explanation of the mechanics of the environmental upgrade agreement for the project

    3.1.1 Overview

    Hardwick’s have selected to use the Environmental Upgrading Agreement (EUA) as the funding vehicle, which has recently been established by the Melbourne City Council in partnership with the Sustainable Melbourne Fund. The financing is an agreement between a site owner, a lender and the local council for works that improve the environmental efficiency of commercial premises. To date, the Sustainable Melbourne Fund has injected over $12 million in building upgrades in Melbourne. This has included boiler and chiller upgrades, variable speed drives, renewable energy systems, lighting solutions and regenerative lifts resulting in the reduction of over 62,000 tonnes of greenhouse gas emissions.

    3.1.2 How It Works

    A number of financiers including NAB, ANZ and Bank Australia currently offer Environmental Upgrade Finance. This kind of finance is secured against the building, rather than the building owner, with repayments collected for distribution to the lender by the local council who, in turn, returns the property charge to the lender. This structure makes Environmental Upgrade Finance lower risk for financiers, and allows them to offer more attractive finance terms, such as longer terms (10 years) and lower interest rates.

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    3.1.3 Benefits

    Environmental Upgrade Finance can help Hardwick’s improve their property asset without the

    risks and negative cash flow implications of traditional finance. It can fund improvements to

    buildings which can reduce operating costs, increase yields, help attract and retain tenants,

    and increase asset values. Benefits include:

    1. No upfront capital or security: Upgrades can be made at zero upfront cost to

    Hardwick’s, and with no additional security required. Traditional finance often requires

    additional security, and will usually not cover all project costs.

    2. Competitive interest rates and term length, reducing re-financing risk:

    Competitive interest rates are available, fixed for 10 years or potentially longer. This

    reduces the re-financing risk and allows Hardwick’s to plan with more certainty.

    Traditional finance is generally only available for terms of 2-5 years.

    3. Improved cash flow: Longer finance terms mean lower annual repayments,

    delivering immediate cash flow benefits to Hardwick’s. Under short term traditional

    finance, capital intensive upgrades may be unattractive due to the significant impact

    on cash flow.

    4. Option to share costs (if the site is tenanted), delivering a better asset for

    Hardwick’s, and a lower-cost and improved working environment for tenants.

    Environmental Upgrade Finance provides a secure and transparent mechanism for

    Hardwick’s and potential tenants to share the costs in proportion to the benefits they

    receive. Without this mechanism, it can be difficult for upgrades to be negotiated until

    the end of a lease.

    3.1.4 Eligibility

    The following are the requirements to be eligible for an EUA:

    Pays council rates;

    Funding is for a retrofit project in a non-residential building / site; and

    Project delivers environmental benefits such as energy, waste and water.

    In total, there are 71 water and energy upgrades that can be funded – full details can be found

    at http://sustainablemelbournefund.com.au/

    3.1.5 Fees and Other Implications

    Administrative fees are payable (these vary by council area), which can be included in

    the finance amount.

    The council can charge penalty interest for payments that are made late. If customers

    default on payments, the council is required to use its enforcement powers to recover

    the charge and repay the finance provider. Council can issue proceedings and recover

    the charge, penalty interest and costs. The charge will be prioritised over any other

    non-council charges or encumbrances over the land

    Customers must give notice of the EUA to existing mortgages, and provide details of

    your existing mortgages to council.

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    There are no reporting obligations contained in the EUA, however customers are required to join the council’s 1200 Buildings program, which includes annual progress reports to the council and a final assessment report once the project is completed.

    Customers must get the consent of the finance provider and the council to any sale or dealing in the land (other than leases). In some circumstances it is possible that consent may be refused. In this case, customers can fully pay out the charge in order to be able to proceed with the proposed dealing. If you want to assign your obligations under the EUA, the purchaser would need to sign a deed poll agreeing to be bound by the terms of the EUA. If the conversion involves a dealing or subdivision of the land you will need the consent of the other parties to that dealing.

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    3.1.6 Cash flows

    The cash flows, as prepared by Sustainable Melbourne Fund under guidance from NGE and

    Beon Energy Solutions, assume the following:

    Financed amount: $2,362,191.6

    Term length: 10 years

    System size: 1,500kW

    The cash flows highlight the immediate cash flow benefits to Hardwick’s with an annual net

    cash benefit available to Hardwick’s throughout the 10 year finance term (as per item 8. Net

    Cash Benefit after tax).

    A brief discussion on each cash flow item is as follows:

    1. Electricity Savings: This represents the savings to Hardwick’s annual energy bill, should

    they proceed with the project. The savings are calculated, at a high level, as the delta between

    Hardwick’s current load profile and the generation profile of the 1,500 MW solar PV system,

    multiplied by exiting tariffs and escalated by a conservative 3.0% per annum in-line with CPI.

    2. LGC Value (Inc GST): This represents LGC's federal government Large-scale Generation

    Certificate (LGC) subsidy based on the actual net energy generated and exported by the

    system (as per “LGC volume” below) by an accredited and registered renewable energy power

    station. These are for Solar PV systems over 100kW, or more than 250MWh and certificates

    are created annually. Current LGC prices above $90/MWh (up from $33/MWh in January

    2015) however a forward curve (shaping downwards) has been applied in these cash flows

    (as per “LGC Price (ex GST)”).

    3. Operating expense:

    This represents the annual operating and maintenance expenditure of the solar system,

    escalated by 3.0% in-line with CPI. The operating and maintenance contract includes provision

    of one on-site technician (for a maximum of 4 hours once monthly at an agreed time and date)

    to complete the following services:

    inspection and monitoring of inverter terminal (email notification)

    software and hardware tests, communication speed testing

    thermal scan of solar distribution board where applicable

    panel cleaning using non-toxic, biodegradable detergents made from plant extracts

    Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

    1. Electricity Savings 298,120 305,153 312,351 319,719 327,261 334,982 342,884 350,972 359,252 367,726 376,401 385,280 394,369 403,672 413,194

    2. LGC Value (inc GST) 226,688 215,477 209,255 207,931 192,192 179,108 177,953 176,880 175,808 174,653 115,720 115,005 114,290 113,575 112,860

    3. Operating Expenses -16,500 -16,995 -17,505 -18,030 -18,571 -19,128 -19,702 -20,293 -20,902 -21,529 -22,175 -22,840 -23,525 -24,231 -24,958

    4. EUA Payments to Council (inc Fees) -320,195 -319,547 -318,956 -318,329 -317,664 -316,956 -316,206 -315,409 -314,563 -313,665

    5. Tax Benefit / (Cost) (@ 30%, depreciation:

    20 Yr, Interest, fees and LGC income)14,300 17,506 15,734 12,499 12,786 12,189 8,078 3,711 -1,037 -6,033 6,424.00 6,801.00 7,182.00 7,570.00 7,963.00

    6. GST expense (Project and LGC's) -233,517 -19,589 -19,023 -18,903 -17,472 -16,283 -16,178 -16,080 -15,983 -15,878 -10,520 -10,455 -10,390 -10,325 -10,260

    7. GST Credit (Project and Fees) 216,818 2,166 2,159 2,150 2,138 2,125 2,109 2,090 2,069 2,044 2,016 2,076 2,139 2,203 2,269

    8. Net Cash Benefit after tax* 185,714 184,171 184,014 187,037 180,671 176,036 178,938 181,871 184,643 187,317 467,866 475,867 484,065 492,464 501,068

    Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

    LGC Volume # 2,240 2,226 2,212 2,198 2,184 2,171 2,157 2,144 2,131 2,117 2,104 2,091 2,078 2,065 2,052

    LGC Price (ex GST) $ 92 88 86 86 80 75 75 75 75 75 50 50 50 50 50

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    4. EUA Payments to Council (inc Fees): This represents the fixed re-payments of principle and interest (at 6.024% per annum) via council rates. 5. Tax Benefit / (Cost) (@ 30%, depreciation: 20 Yr, Interest, fees and LGC income): As a number of items are tax assessable or deductible, this represents the tax benefit / cost of the solar system taking into account:

    straight line deprecation across 20 years (deductible)

    interest (at 6.024% per annum) on the outstanding balance payable to council (deductible)

    administrative fees (deductible)

    LGC income derived from the actual net energy generated and exported by the system (assessable)

    Income tax rate (at 30% corporate income tax rate) on the net cash benefit 6 & 7 GST expense (Project and LGC's) & GST Credit (Project and Fees): This represents the GST consequence of the above transactions 8. Net Cash Benefit after tax*: This represents the overall benefit of the solar system to Hardwick’s, should they proceed with the project. The cash flows, in their entirety, have been attached in Appendix 3.

    3.1.7 High Level Steps

    Contact Sustainable Melbourne Fund to participate in the program (Complete)

    Undertake a Level 2 energy audit (Complete)

    Identify projects that are cost effective and will improve your building’s NABERs rating (Complete)

    Secure finance (SMF can assist with this process) (In-Progress)

    Sign the environmental upgrade agreement (To be complete)

    Commence your building retrofit project (To be complete)

    Realise the energy savings and cost savings from your project (To be complete)

    3.2 Projected electricity generation from the microgrid

    3.2.1 Overview

    Hardwick’s is a one million head plus per annum abattoir and, due to expected growth, explored power capacity increases, backup supply and bill reduction methods in partnership with Next Generation Electrical and Beon Energy Solutions.

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    To understand the drivers of Hardwick’s current load profile, analysis focused on the 2,000 kVa connection, comprising of:

    1 x freeze compressor, 70 – 90 kW with a steady load

    3 x chilling compressors, 150 – 465 kW with intermittent loads

    Other loads, 400 – 600 kW (conveyors, cutting and lights) with intermittent loads

    Six technologies were assessed against a benchmark HV connection upgrade option to reduce the current load profile. A high level summary of the assessment is as follows:

    1. Peak instantaneous load witnessed as at 23rd Feb 16

    2. Growth Plan (year on year):

    Lamb 10%

    Beef 5%

    3. Long term peak load on small Transformer

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    It was concluded that a microgrid system incorporating solar PV installation presents best

    value to addressing current and future load requirements with the benefits of reduced outage

    risks and complexity to the benchmark option of a HV connection upgrade. The microgrid solar

    PV system was optimised to maximise roof space, resulting in the following options:

    However, it was recognised that a combined 590kW solar system would not fully address

    current load and growing capacity requirements, nor provide a substantial microgrid

    emergency system. Based on detailed analysis, the 500kW solar system proposed for the

    main factory rooftop would only offset 10.5% of Hardwick’s actual full year load profile (2015

    interval data); represented as “Total Solar Energy Utilised” 765 MWh / “Total Energy Utilised”

    7,225 MWh in the following operational outputs:

    Further, the graph below presents the expected performance the 500kW solar system

    overlayed against average weekly load for the three seasons based on Hardwick’s historical

    consumption profile and existing tariff.

    1. Maintenance Shed (20kW) NMI 62034732174

    Retail meat shop (70 kW)

    NMI VCCCLF00301

    Main Factory (500 kW)

    NMI VCCCLF00061

    1 Maintenance Shed (20kW) NMI 62034732174

    3 Main Factory (500 kW) NMI VCCCLF00061

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    Therefore, a ground mount 1.5MW solar system was proposed using the idle 9.9 acre land to

    the north of the main factory, resulting in the following expected performance against the same

    historical consumption profile and existing tariff. This will also provide a substantial emergency

    microgrid system to enable continuation of operations of significant cool stores during an

    extended external power outage:

    --200 kWh400 kWh600 kWh800 kWh

    1,000 kWh1,200 kWh

    Sun Mon Tue Wed Thu Fri Sat

    Winter Average Weekly Load Grid Usage Solar PV Exported Solar PV Utilised Winter Load

    --200 kWh400 kWh600 kWh800 kWh

    1,000 kWh1,200 kWh

    Sun Mon Tue Wed Thu Fri Sat

    Summer Average Weekly Load Grid Usage Solar PV Exported Solar PV Utilised Summer Load

    --200 kWh400 kWh600 kWh800 kWh

    1,000 kWh1,200 kWh

    Sun Mon Tue Wed Thu Fri Sat

    Shoulder Average Weekly Load Grid Usage Solar PV Exported Solar PV Utilised Shoulder Load

    --200 kWh400 kWh600 kWh800 kWh

    1,000 kWh1,200 kWh

    Sun Mon Tue Wed Thu Fri Sat

    Winter Average Weekly Load Grid Usage Solar PV Exported Solar PV Utilised Winter Load

    --200 kWh400 kWh600 kWh800 kWh

    1,000 kWh1,200 kWh

    Sun Mon Tue Wed Thu Fri Sat

    Summer Average Weekly Load Grid Usage Solar PV Exported Solar PV Utilised Summer Load

    --200 kWh400 kWh600 kWh800 kWh

    1,000 kWh1,200 kWh

    Sun Mon Tue Wed Thu Fri Sat

    Shoulder Average Weekly Load Grid Usage Solar PV Exported Solar PV Utilised Shoulder Load

    --200 kWh400 kWh600 kWh800 kWh

    1,000 kWh1,200 kWh

    Sun Mon Tue Wed Thu Fri Sat

    Winter Average Weekly Load Grid Usage Solar PV Exported Solar PV Utilised Winter Load

    --200 kWh400 kWh600 kWh800 kWh

    1,000 kWh1,200 kWh

    Sun Mon Tue Wed Thu Fri Sat

    Summer Average Weekly Load Grid Usage Solar PV Exported Solar PV Utilised Summer Load

    --200 kWh400 kWh600 kWh800 kWh

    1,000 kWh1,200 kWh

    Sun Mon Tue Wed Thu Fri Sat

    Shoulder Average Weekly Load Grid Usage Solar PV Exported Solar PV Utilised Shoulder Load

    --200 kWh400 kWh600 kWh800 kWh

    1,000 kWh1,200 kWh

    Sun Mon Tue Wed Thu Fri Sat

    Winter Average Weekly Load Grid Usage Solar PV Exported Solar PV Utilised Winter Load

    --200 kWh400 kWh600 kWh800 kWh

    1,000 kWh1,200 kWh

    Sun Mon Tue Wed Thu Fri Sat

    Summer Average Weekly Load Grid Usage Solar PV Exported Solar PV Utilised Summer Load

    --200 kWh400 kWh600 kWh800 kWh

    1,000 kWh1,200 kWh

    Sun Mon Tue Wed Thu Fri Sat

    Shoulder Average Weekly Load Grid Usage Solar PV Exported Solar PV Utilised Shoulder Load

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    3.2.2 Normalised Production and Performance Ratio

    Chart highlights average daily production per 1 kW solar array in

    Kyneton. Mitigation – Routine maintenance and on-going monitoring

    Chart highlights average daily performance as ratio of 1

    (maximum). Current performance of 0.861 above industry average

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    3.3 Benefits of integrated grazing management plan for stock grazing and shading under microgrid solar arrays

    This dual use land project is capable of offering not only grazing land for sheep and renewable

    energy electricity generation, but utilises these to create a partly renewable energy consumer

    product (lamb and beef) with 30% of power demand being provided by on site renewable

    energy. The project combines farming, growing and processing into a unique vertically

    integrated value chain. The project not only provides the agricultural land to graze sheep but

    also the clean energy required to process the sheep on-site into end products for consumers.

    Critics of large scale solar developments often point to the amount of productive land taken

    up by solar arrays; agriculture is critical to the national economy. This project provides a cutting

    edge example of the research possibilities of dual land use available through ground mounted

    PV renewable energy systems. Dual land use combining renewable energy systems and

    agriculture is not new. Examples of dual land use include:

    Japanese “Solar Sharing”:

    http://www.renewableenergyworld.com/articles/2013/10/japan-next-generation-

    farmers-cultivate-agriculture-and-solar-energy.html

    University of Queensland dual use operation saves O&M costs on sheep feed and

    PV farm ground maintenance :

    http://www.abc.net.au/news/2016-08-15/uq-uses-sheep-to-cut-grass-at-gatton-solar-

    research-farm/7734770

    Greenough River Solar Farm trialing vegetation control vs Sheep damage:

    http://www.all-energy.com.au/RXAU/RXAU_All-

    Energy/documents/2013_Day_1_Presentations/Wed%20Solar%201100%20Mark%2

    0Rayner.pdf?v=635191354957379747

    Dual Purpose land use mitigates land use conflicts:

    https://www.gses.com.au/wp-content/uploads/2016/03/GSES_utility-scale-dual-

    purpose-land-usage.pdf

    Newlands Farm 66 acre dual purpose solar farm - http://www.bbc.com/news/uk-

    england-hampshire-24274074

    The physical installation has several advantages over the above examples:

    Sheep can walk under the array – In this installation there is clearance of 1.2m between

    the ground and the array. This allows sheep full access to the grass under the array

    as well as increased array cooling from improved ventilation.

    Mitigation of array damage from sheep - This project aims to improve on the examples

    above by mitigating any damage from the sheep due to the elevated array. The vast

    majority of adult sheep are below 1.2m in height and can therefore pass under the

    array uninhibited.

    Site Security - In this installation there will be an installed 1.8m high chain mesh fence,

    which will prevent humans, foxes, feral cats entering within the solar farm.

    This can be visually represented as below:

    http://www.renewableenergyworld.com/articles/2013/10/japan-next-generation-farmers-cultivate-agriculture-and-solar-energy.htmlhttp://www.renewableenergyworld.com/articles/2013/10/japan-next-generation-farmers-cultivate-agriculture-and-solar-energy.htmlhttp://www.abc.net.au/news/2016-08-15/uq-uses-sheep-to-cut-grass-at-gatton-solar-research-farm/7734770http://www.abc.net.au/news/2016-08-15/uq-uses-sheep-to-cut-grass-at-gatton-solar-research-farm/7734770http://www.all-energy.com.au/RXAU/RXAU_All-Energy/documents/2013_Day_1_Presentations/Wed%20Solar%201100%20Mark%20Rayner.pdf?v=635191354957379747http://www.all-energy.com.au/RXAU/RXAU_All-Energy/documents/2013_Day_1_Presentations/Wed%20Solar%201100%20Mark%20Rayner.pdf?v=635191354957379747http://www.all-energy.com.au/RXAU/RXAU_All-Energy/documents/2013_Day_1_Presentations/Wed%20Solar%201100%20Mark%20Rayner.pdf?v=635191354957379747https://www.gses.com.au/wp-content/uploads/2016/03/GSES_utility-scale-dual-purpose-land-usage.pdfhttps://www.gses.com.au/wp-content/uploads/2016/03/GSES_utility-scale-dual-purpose-land-usage.pdfhttp://www.bbc.com/news/uk-england-hampshire-24274074http://www.bbc.com/news/uk-england-hampshire-24274074

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    The above differences in installation and unique business opportunities provide an opportunity

    to study additional dual land use research topics including:

    Advancing research into crop/grass growth under various dual purpose and partial

    shade situations;

    Measurement and quantification of operational cost reduction as a result of dual

    purpose land use combining sheep grazing and PV installation;

    Opportunities for advertising and branding studies for “Hardwick’s Solar Sheep” or

    similarly branded products.

    The project will encompass the above studies. Such diversity of land use will increase the

    overall land value and productivity and will be felt not only by the land owner, Hardwick’s, but

    also by communities as the land creates a new identity and purpose for itself.

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    3.4 Integration with site electrical network

    3.4.1 Build Plan

    The array field will host a fixed-tilt, ground mounted system. The system is comprised of 120

    fixed array tables, 44 of which are exterior tables (i.e. edge tables) and 76 are interior tables.

    Each fixed tilt array table is comprised of 4 rows of 10 modules each, using the Jinko 320W

    module. At the current project phase, the table mounting design is awaiting a pull out test on

    site.

    Cable management on the fixed tilt array tables is achieved by running all cables back to the

    centre of the array field. A string combiner box will be mounted on the fixing pole lining the

    centre of the array field using a vertically mounted section of slotted c-channel (ezystrut or

    similar). UV rated, HD flexible conduit will enter the string combiner box at the top. 100mm

    Diameter Black UV rated, UHD conduit will exit the bottom of the string combiner box. A 45

    degree angle will be used in the 100mm Black UV rated, UHD conduit so as to create

    separation from the pile driven pole which supports the array table. The conduit will be

    supported by a cantilever (angle bracket from ezystrut or similar) which is also mounted to the

    vertically fixed section of slotted c-channel which is fixed to the west side of the western most

    pile driven pole.

    Trench lines are to be created running north-south through the centre of the array field. Cable

    pits will be used to create junctions for the trench lines at each array table row. String combiner

    boxes will all include DC isolation as well as overcurrent protection. The DC isolation device

    used is the 160A nominal rated isolator which comes as standard with the SMA combiner box.

    DC conductors will travel back to the inverter room. The complete system will be connected via 24 x SMA STP60 Inverters. The inverters will be paralleled in a custom LV board within the inverter room. From the LV board, conductors will connect to a 22kV step-up transformer.

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    The 22kV line will then travel back to the main site where the main switch board is located on the south side of the Hardwick’s Meat main property. This cable run is approximately 380m. External to the site main switch board will be a pad mount step down transformer. The LV conductors from the step-down transformer will then join the main switch board bus, which must be retrofitted to accept the connection. Detailed designs can be found in Appendix 1.

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    3.4.2 System Electrical Schematic

    As per NGE detailed designs

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    3.4.3 Trench and Cable Plan

    As per NGE detailed designs

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    3.5 Planning considerations

    3.5.1 Topology & Soil Testing Results

    NGE has engaged Chadwick Geotechnics to prepare a detailed soil testing report to determine

    the ground conditions at Hardwick’s and to provide geotechnical design parameters for the

    design of the proposed foundations. The report ensures the structural integrity of the solar PV

    arrays.

    Based on the proposed works, six (6) boreholes were proposed to be drilled to 3.45m or refusal

    whichever was the lesser, with in situ standard penetration tests and shear vane testing.

    Disturbed samples were collected for visual classification.

    The fieldwork was carried out on 29th August 2016. The fieldwork comprised:

    Six (6) boreholes.

    Six (6) dynamic cone penetrometer tests.

    Six (6) Standard Penetration Tests.

    Shear Vane Tests.

    Details of the individual field tests are dealt with separately in sections and can be found in

    the comprehensive report in Appendix 2. An example of one of the borehole results (BH1),

    provided overleaf, highlights the suitability of the proposed 1.8 meter design.

    The following summary of the subsurface stratigraphy is inferred from the available site

    investigation data, and as such only represents the site conditions at the locations of the field

    testing. It is possible that conditions at locations between the field tests may be quite different

    and therefore this summary should only be understood to apply to the test locations.

    The subsurface materials encountered in the boreholes at the site could be categorised into

    three main geological units and summarised as follows:

    Unit 1 - SILT

    This material was found in the top part of all the boreholes and extended to depths ranging

    from 0.15 to 0.35 m below ground level (bgl) and was described as a SILT which was moist

    and soft to firm consistency.

    Unit 2 – CLAY (QVN)

    This unit was found in all the boreholes beneath the SILT. The unit was described as clay of

    high plasticity and was firm to very stiff consistency and extended to depths ranging from 1.1

    to 2.0m.

    Unit 3 – CLAY (DG)

    This unit was found in all the boreholes beneath the quaternary clays. The unit was described

    as clay of medium to high plasticity and was very stiff to hard consistency and extended to

    termination depths of 3.45m.

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    The detailed soil testing report confirms the proposed site will be appropriate for construction

    works.

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    3.5.1 Local Council Feasibility

    A development application has not been completed at present however, the council is aware

    of the project and supportive of the initiative and approach. Upon acceptance of the project,

    council building permits will be submitted for approval.

    3.5.2 Network Study

    An enquiry application has not been completed at present. Upon acceptance of the project,

    an application will be submitted to Powercor for approval.

    Dial-Before-You-Dig has been completed, highlighting no presence of water, electricity and/or

    telecommunication services running through the site.

    3.5.3 Infrastructure

    Civils: The design for the following works is to be completed by a civil engineer:

    The improvement of the embankment area, around the existing damns and the west

    side of the array field and access; and

    The 4 metre access road, which will leave the array field and head west and then south

    back to the car park of Hardwick’s Meat. This path will take the access road across

    two creek beds. A reinforced culvert will be used at each of these crossings

    Site security and access: A 1.8m tall fence with 0.2m of barbed wire atop will line the northern

    and eastern property boundary around the array field. The fence will continue just to the east

    side of the three dams which will form the western side of the array field. Within the fence will

    be a void area which will help to mitigate risk from shading and from vandalism. The void area

    will also act as a vehicle access path.

    The array fence will have a 6 metre sliding security gate in the south western corner of the

    southern fence, controlled with swipe access. Inside of the sliding security gate will be a

    secured check-in/parking area.

    3.5.4 Design Considerations

    All design dimensions have been developed using approximate real world references and, as

    such, all site set-outs, site orientation and build dimensions must be verified onsite by a land

    surveyor. If variances occur, mounting manufacturer installation drawings and instructions

    should be used. For trenching lines, any variance should refer to elevation standoff

    dimensions.

    3.5.5 Finance & Taxation Considerations

    Next Generation Electrical (NGE) engaged an independent accounting firm, Jones Louros &

    Associates Pty, to provide advice on the financial and taxation implications of the Hardwick

    solar project. This engagement was a pro-active measure from NGE to ensure appropriate

    financial due diligence on behalf of Hardwick’s. The transaction review covered the

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    implications of funding from Meat & Livestock Australia, the Environmental Upgrading

    Agreement (EUA) and changes to Group structure (operational implications, stamp duty

    implications, capital gains tax and other tax implications and risk mitigation including but not

    limited to asset protection and transactional risk). The independent review ensures the

    structure of the project will be optimised to best suit Hardwick’s and can be relied upon for

    projects of a similar nature going forward.

    4 Summary of costs and benefits (economic, social, and

    environmental)

    4.1 Economic

    The power requirements of Hardwick’s are growing due to increasing production and processing of red meat and offal products. Hardwick’s is faced with the challenge of major infrastructure costs to upgrade grid connection and alternative technologies such as a microgrid based on solar PV represent a cost efficient solution as well as risk mitigation against an increasingly unreliable external power grid. Hardwick’s currently does not have any back up power supply during a network power outage and as the business grows, the economic risk of an extended power outage has major impacts on perishable product and production. The microgrid system mitigates this risk. An economic model and cost/benefit analysis has been developed as part of the project. Extensive analysis of the Hardwick’s power usage trends, demands and future loads was conducted. Several technologies were analysed including battery storage, combustion generation, thermal storage, HV customer, power correction and solar PV based microgrid. This package has been used to highlight a detailed value proposition based on customer input data and average system operational data for systems of a similar size from the Beon Energy Solutions customer database, taking into consideration all known costs, losses, gains and savings. This model and approach can be repeated for other customers within the industry, saving time and money during the research phase. The economic model leverages:

    Customer inputs such as interval data, retail invoices (and assumed escalation rates) and site locations to determine weather conditions and renewable credit prices and;

    Averages system operational data for systems of a similar size from the Beon Energy Solutions customer database such as capacity factors, seasonalised utilisation factors for both peak and off peak periods to account for weather conditions, degradation profiles, irradiation profiles, useful lives and maintenance costs)

    The economic headline for the 1.5MW Solar PV based microgrid system is a simple payback period of 5.7 years and an internal rate of return (IRR) of 17.6%, meaning the project would be NPV positive with a discount rate of up to 17.6%. This includes:

    Year 1 electricity saving of $298,120, year 5 electricity saving of $327,261 and total 20 year electricity saving of $7,501,074

    Year 1 LGC income (incl. GST) of $226,688, year 5 LGC income of $192,192 and total LGC income (to 2030 when incentive ends) of $2,507,395.

    This analysis does not include any potential losses associated with a major external power grid outage. Should a major external failure occur for an extended period, the project could pay for itself immediately.

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    4.2 Social

    Next Generation Electrical will deploy it’s tried and test approach to installing commercial solar, using experienced internal resources to project manage the installation and contract local electricians to deliver part of the installation. Further, while most of our equipment from tier 1 manufacturers is procured from overseas, they all have offices throughout Australia with locally employed resources. The Environmental Upgrading Agreement (EUA) has been selected as the source of funding (outside of the MLA contribution) which is a financing agreement between a customer, a lender and the local council. Such an agreement provides local and economic stimulus through jobs and training.

    4.3 Environmental

    A solar PV based microgrid is a method of capturing the sun’s energy to generate electricity cleanly. Solar PV is a vital component of the Australian energy mix as energy usage continues to grow and expand across the nation. Without the use of such alternative energy sources, the consumption of fossil fuels will grow to unsustainable levels. Energy production and conversion are the main sources of greenhouse gas emissions (carbon dioxide, methane and nitrous oxide). Coal mining in particular can have significant impacts to the environment and a vital step to reducing CO2 emissions is to deploy renewable energy. The 1.5MW solar PV system will save approximately 3,145 tonnes of CO2 per year, or 30% of the present CO2 resulting from electricity used at Hardwick’s. The Commonwealth Government’s Mandatory Renewable Energy Target (MRET) scheme are meant to encourage additional generation of renewable energy. The Renewable Energy Target (RET) is an expansion of the MRET and requires an additional 20% of Australia’s total electricity supply to be sourced from renewable projects by 2020, assuring that national greenhouse gas emissions are reduced to meet Commonwealth Government targets. The 1.5MW microgrid system will generate an estimated 2,296 MWh (roughly one-third of total energy consumed at the site). The establishment of this project not only shows significant environmental leadership amongst the Meat & Live Stock industry but to all industries due to the sheer size and grid risk management capability of the microgrid system. The array contains 4,688 solar panels over a 10-acre expanse. Whilst there are larger solar arrays nationally, this system will be the largest in Victoria according to the Clean Energy Council.

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    5 Success in meeting the milestone

    5.1 Milestone 1: Successful

    The milestone was successfully completed, engaging various internal and external

    stakeholders. Importantly, the completion of these milestones ensures Hardwick’s receive a

    bespoke and cost efficient solution to their growing energy requirements.

    The initial feasibility and detailed cost/benefit analysis provides the foundation to commence

    the overall project. Many aspects of the project will rely heavily on the information obtained

    from various reports and models, developed internally and externally. Further, this milestone

    is critical in determining the Go / No Go outcome.

    6 Overall progress of the project (optional)

    6.1 Milestone 1 of 6

    All information is now available for Hardwick’s to make an informed decision on whether to

    proceed with the project and cost investment. Should the project proceed, an additional 5

    milestones will need to be completed covering designs and approvals, install and

    commissioning, system operation and a final report including a presentation video.

    Please refer to the GANTT chart, attached in Appendix 4, for further information.

    7 Conclusions/recommendations

    7.1 Conclusion

    This first milestone, initial feasibility and cost/benefit analysis, has confirmed that a microgrid

    ancillary/emergency solar PV system and battery storage can provide a cost effective risk

    management solution to electrical services for Hardwick’s Pty Ltd meat processing facility at

    Kyneton.

    The intellectual property acquired from this milestone can be disseminated to similar

    customers within the MLA, saving significant time during the research and development

    phase. The market assessment of all available technologies and funding models completed

    as part of this project ensures potential customers not only receive an objective approach to

    reducing their energy bill and contributing to a greener environment, but also achieve

    substantial business protection from major external extended power grid failures.

    This milestone report also provides the basis of the “Go/No Go” decision point detailed at this

    stage of the project within the Project Agreement Milestones schedule.

    In terms of the “Go/No Go” decision point, it is proposed that the Research and Development

    benefits resulting from the intellectual property to be developed during the detailed design,

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    construction and initial operations of this project will be of significant benefit to MLA

    stakeholders.

    Hardwicks note that throughout the completion of Milestone 1, Next Generation Electrical and

    Beon Energy Solutions have demonstrated high levels of advanced knowledge and expertise

    in microgrid technology and have demonstrated the potential benefits of new load-

    shedding/battery/control systems with power grid interfaces. Hardwick’s have a high level of

    confidence that the proposed R&D will provide a beneficial solution with ready application for

    the Australian red meat industry.

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    8 Appendix

    8.1 Appendix 1 – Detailed Designs

    Please see separate attachment, Appendix 1 – Detailed Designs.pdf

    8.2 Appendix 2 – Topology Report

    Please see separate attachment, M1.Appendix 2 - Topology Report.pdf

    8.3 Appendix 3 – EUA Cash flows

    Please see separate attachment, M1.Appendix 3 – EUA Cashflows.xlsx

    8.4 Appendix 4 – GANTT Chart

    Please see separate attachment, M1.Appendix 4 – GANTT Chart